'Crisis' for EU paper recyclers after Chinese waste import ban hits

paper waste

The Chinese ban on waste imports, implemented in January 2018, has led to "a crisis situation" in the European paper recycling sector, with a chronic oversupply of recovered paper and plummeting prices according to the European Recycling Industries Confederation (EuRIC).

China notified the WTO in 2017 that as of the start of 2018, it would ban imports of 24 different categories of waste, including paper and plastics, with a complete phase out planned by 2019, with environmental concerns cited as the reason behind the move.

At the time, European recyclers labelled the move as "a wake-up call", but the reality two years later has proven to be harder than anticipated.

In 2018, according to EuRIC, Europe collected around 56.6 million tonnes of recovered paper with around 48.5 million tonnes being used for production within the bloc. That leaves a gap between supply and demand of over 8 million tonnes of recovered paper.

“The absence of end-markets for eight million tons of recovered paper over the last two years has resulted in a sharp decline of recovered paper prices whose market price is 300% lower in June 2019 than in June 2017,” said EuRIC in a statement..

“The paper recycling sector is currently in a crisis situation,” EuRIC warned, saying a growing number of companies active in paper collection and recovery had to close as a result – a situation it says “is at odds with the objective of moving towards a more circular economy”.

“Europe’s recycling industry can no longer bear such market conditions for a third year in a row,” EuRIC said, saying policymakers need to “urgently” take action.

Sources within the industry say that the oversupply situation is unlikely to change any time soon.

According to the Confederation of European Paper Industries (CEPI), around half the paper produced in Europe comes from recycled material. While new recycling centres are being built, it will take another two to five years before they are available.

CEPI has also said that the move by the Chinese government “was announced years ago and cannot have come as a surprise to anyone”. The trade group laid the blame on ~short-sighted speculation" by waste management companies and traders who “have been obsessed in the past by the attractive Asian markets”.

“It shows the need to put the emphasis on quality and work with a supply-chain approach in mind,” CEPI added.

Before China began imported enormous amounts of recovered paper from Europe, the EU's paper market was relatively balanced. During the 2000, there was over-demand and CEPI expressed confidence that the situation would return to normal in a few years.

“The reason why we are bit less alarmed is that we know the paper industry is investing a lot into new recycling capacity. There may be turbulence on the market in the short term, but in the long term (2 to 5 years), we’re confident,” said Ulrich Leberle, raw materials director at CEPI.

Before the Chinese ban on waste imports, “companies couldn’t invest in recycling capacity anymore because competing demand for recyclates coming from China was so strong,” Leberle explained.

However, he added that was no longer the case.

According to CEPI, there are several new recycling facilities in the pipeline, representing investments worth at least half a billion euros and a capacity of over 5 million tonnes. Nonetheless, the market is likely to remain oversupplied until that point.

“This paper will eventually be absorbed in Europe,” Leberle said in an interview EURACTIV. “And concerning the quality requirements, it’s a positive signal to provide European industry with well-collected paper rather than exporting mixed waste to China, which in any case ends being landfilled because it cannot be used by the Chinese industry either.”